CBS, Time Warner Cable Blackout Drags On as Consumers Fume

Cast members (L-R) Rocky Carroll, Mark Harmon and Cote de Pablo participate in a panel for CBS series "NCIS" during the CBS sessions at the Television Critics Association winter press tour in Pasadena, California January 11, 2012.

The bitter financial fight between Time Warner Cable and CBS extended into a fourth day Monday, with no resolution in sight for a dispute that has angered consumers from coast to coast. Millions of viewers remained without CBS, the highest-rated broadcast network in the country, after Time Warner Cable, the nation’s second largest cable cable company, yanked CBS on Friday night, following the breakdown of acrimonious negotiations between the corporate giants.

Time Warner Cable’s spat with CBS revolves around so-called retransmission consent fees, which cable and satellite companies pay to broadcasters for the right to carry their channels. In recent years, these fees have become substantial sources of revenue for the broadcasters, and led to financial disputes between broadcasters and cable and satellite providers. CBS wants more money from Time Warner Cable for its flagship network. The cable giant has balked.

CBS, under president and CEO Les Moonves, has been particularly aggressive in retransmission fee negotiations. As the negotiations deteriorated leading up to Time Warner Cable’s blackout of CBS, Moonves declared, “We’re at war with Time Warner Cable.” According to published reports, CBS is asking for an increase from Time Warner Cable of about 100%, to $2 a subscriber, from $1. (By comparison, ESPN commands more than $5 per subscriber, according to industry estimates.)

Variety, the influential entertainment industry trade publication, reported that this is the first extended blackout for CBS-owned stations in almost a decade. On Sunday, an estimated 3.5 million viewers in New York, Los Angeles, and Dallas were unable to watch CBS programming, including golf star Tiger Woods’s seven shot win in the final round of the Bridgestone Invitational. The CBS-owned pay TV channel Showtime was also yanked.

“I’m missing Tiger Woods win, then Dexter & Ray Donovan. You a–holes. @TWC @CBS,” tweeted one irate viewer. In New York City, viewers expecting to watch the news program 60 Minutes on Sunday evening were greeted with a romantic comedy called “The Vow,” starring Rachel McAdams and Channing Tatum, after Time Warner Cable replaced CBS on Channel 2 with Starz Kids And Family.

“In the fight between CBS and Time Warner Cable, viewers, as usual, are the losers,” John Bergmayer, senior staff attorney at D.C.-based consumer advocacy group Public Knowledge, said in an emailed statement. “These hardball tactics can only lead to higher cable bills and ever-growing programming bundles.” (Here are some options for Time Warner Cable customers to watch CBS.)

Several media analysts told the New York Times that the standoff could last from anywhere between 10 days and six weeks, but there is general agreement that the two sides will reach a deal before the NFL football season starts. Rich Greenfield, a media analyst at BTIG, said that the two sides wouldn’t risk the opprobrium of viewers if NFL games are blacked out. CBS broadcasts New York Jets regular season football games.

After blacking out CBS on Friday, Time Warner Cable — which was spun off as an independent public company from TIME parent Time Warner in 2009 — went so far as to suggest that consumers look into Aereo, the upstart New York-based company that picks up free, over-the-air TV signals and streams them onto the Internet. Time Warner Cable earned $7.65 billion in profit over the last 12 months.

In a tit-for-tat action, CBS responded by blocking videos of full episodes of its programming on CBS.com for Time Warner Cable broadband customers in the affected markets. CBS is home to popular programming such as “The Big Bang Theory,” “Big Brother,” “NCIS,” and “60 Minutes.” CBS earned $3.65 billion in profit over the last 12 months.

“CBS has demanded an outrageous increase for programming that CBS delivers free over the air and online, requiring us to remove their stations from your lineup while we continue to negotiate for fair and reasonable terms,” Time Warner Cable wrote in an on-screen notice to subscribers. “We regret this inconvenience, but feel it is crucial that we let CBS know that we’re willing to do what it takes to keep down the price of TV.”

For its part, CBS said it regretted Time Warner Cable’s “ill-advised” action, which it said was not only “injurious” to its viewers, but also to Time Warner Cable itself. “What CBS seeks, and what we always have sought from the beginning, is fair compensation for the most-watched television network with the most popular content in the world,” CBS said in a statement. “We will not accept less.”

Late Sunday, a resolution to the dispute remained elusive. In fact, Time Warner Cable and CBS couldn’t even agree on whether any negotiations were under way, according to the Wall Street Journal. A Time Warner Cable spokeswoman told the paper that talks were “ongoing,” while CBS said “there are no negotiations taking place at this time.”

The programming dispute even reached the New York City mayoral race over the weekend. “Television service should not be dependent on the whims of a bitter corporate stand-off,” New York City Council Speaker Christine C. Quinn, the leading mayoral candidate, said in statement Saturday. “Three million New Yorkers subscribe to Time Warner Cable and expect access to each and every channel they pay for. I urge Time Warner Cable and CBS to resolve this dispute as quickly as possible and to end the blackout now.”

For now, the standoff between CBS and Time Warner Cable continues, with consumers caught in the middle. And with NFL football season still weeks away, the dispute could drag on even longer. “Here’s an idea for both parties: Leave us out of it,” New York Times media reporter David Carr wrote Monday, effectively summing up how most would-be viewers feel about the dispute. “Continue to bash each other’s heads in all you want. Just don’t pretend this is a noble crusade for the consumer.”